BRC-20

BRC-20 is an experimental fungible-token standard built on top of Bitcoin Ordinals. Created in March 2023 by a pseudonymous developer known as Domo, it works by inscribing small JSON documents onto satoshis instead of inscribing an image. Those JSON payloads follow a simple schema describing one of three operations: deploy (define a token ticker, supply cap, and per-mint limit), mint (claim units of a deployed token), and transfer (move units between holders). The name is a deliberate wink at Ethereum's ERC-20, but the machinery underneath could hardly be more different.

How it works

Each BRC-20 operation is an inscription: a JSON object written into the witness data of a Taproot transaction. There is no smart contract and no on-chain state machine enforcing any rules. Instead, off-chain indexers read every BRC-20 inscription in chronological order and compute balances by applying the standard's conventions — first-come mints win, transfers require a prior valid balance, malformed operations are ignored. Even a transfer is a two-step dance: first inscribe a transfer document onto a satoshi you control, then send that inscribed satoshi to the recipient, at which point indexers debit you and credit them.

The indexer trust model

This design places BRC-20 token accounting in indexer software, not in Bitcoin consensus — an important distinction for anyone reasoning about what they actually hold. Your Bitcoin node validates the transactions carrying the JSON, but it has no opinion about the tokens; whether a balance exists is a matter of indexers agreeing on the same ruleset and the same interpretation of edge cases. Disagreements between indexer implementations have real consequences for holders, and marketplaces effectively act as oracles for which interpretation counts. Owning a BRC-20 balance means trusting a social consensus of indexer operators layered on top of Bitcoin's actual consensus.

The same layering creates a sharp wallet-hygiene requirement. BRC-20 balances live on specific inscribed satoshis inside specific UTXOs, but an ordinary Bitcoin wallet neither sees nor respects that: it will happily spend an inscribed output as transaction fees or sweep it into a consolidation, destroying the token balance as far as every indexer is concerned. Holders therefore need ordinal-aware wallets that practice strict coin control — segregating inscribed UTXOs from the spendable balance — and anyone importing an old seed into a naive wallet risks vaporizing tokens they forgot they held. It is a vivid illustration of the design: Bitcoin consensus protects the satoshis perfectly, and knows nothing at all about what the indexers believe those satoshis carry.

Trade-offs and the fee-market footprint

BRC-20's reliance on inscribing JSON for every operation consumes more block space per token action and creates more UTXOs than leaner alternatives — inefficiencies that motivated the later Runes protocol, which replaced the inscription dance with a single OP_RETURN message. The standard remains explicitly experimental: its own documentation warns that it was an idea made public, not a finished design. None of that stopped it from periodically dominating the chain; the minting frenzy of May 2023 drove transaction fees to levels not seen in years and filled the mempool with hundreds of thousands of small inscriptions.

Why miners should understand it

D-Central covers BRC-20 neutrally, as part of the Bitcoin metaprotocol landscape rather than as an endorsement. Its practical relevance to a mining operation is the fee pressure that minting waves create: bursts of high-fee-rate transactions raise revenue per block, reshape transaction selection, and make fee income lumpier and harder to forecast. Whatever one thinks of JSON on the blockchain, a miner's job is to sell block space to whoever bids for it — and BRC-20 proved there are bidders nobody's spreadsheet predicted.